In response to the sanctions of the West related to the annexation of the Crimea to the Russian Federation, Russian exporters want to refuse the U.S. dollar as the main means of payment with foreign buyers of oil and gas. However leading Russian energy players offer different approaches to this issue.
Heavy natural gas artillery.
Gazprom, the Russian energy monopolist wouldn't mind getting payments in rubles. It was declared by the Representative of the state corporation Sergey Kupriyanov.
However, to realize these plans in a few months or even years, as they want to do with the national payment system, in counterbalance to VISA and MasterCard, will be hardly possible. Even high-ranking sources in the Russian government refer to it anonymously.
The head of other largest state company – the chairman of VTB bank Andrey Kostin suggested to adopt all payments with contractors abroad in Russian rubles. He reminds that almost a half of Russian export (to be exact, 44 percent) are products of the "three pillars": "Gazprom", "Rosneft" and "Rosoboronexport". Supplies of these corporations brought almost 230 billion dollars revenue last year.
Heads of the "three pillars" would like to support A. Kostin's idea, but also don't find it possible to instantaneously jump off from the dollar's needle. However, if think strategically, it is possible to start at least with parallel circulation of the American and Russian currencies in payments for domestic energy carriers. As an addition, it is possible to use currency of the country a contract is signed with: rupees for the companies of India, yuans for consumers from China, euro for members of the European Union.
No one is not ready yet.
But again, we can only talk about the future - no one will change the currency peg of existing contracts. Moreover, according to analyst of Raiffeisenbank Andrey Polishchuk, in the foreseeable future it is only possible with medium-sized transactions. Besides price in rubles will be pegged to the freely convertible currencies for hedging, in other words the base price will be really set in dollars or euro.
Most experts are also not sure that it will be possible to sell abroad the Russian energy carriers in rubles until the Russian currency is not freely convertible. Attempts to use the ruble in payments with foreign buyers were made in the past. The Russian analysts give examples of payments between "Rosneft" and the Chinese state corporation CNPC which started in 2008.
But payments in rubles add a headache for counterparties of Russian suppliers: primarily because of the need to open ruble accounts and to sustain essential losses on currency transactions. Moreover, the largest foreign contractors should reserve the considerable sums in the Russian currency, and for them it is equivalent to freezing assets. It is certainly possible to carry out a law through parliament which will oblige foreign buyers to do that, but in such case Russia can face even bigger outflow of foreign capital.
Moreover, payments in rubles can be disadvantageous for Russian exporters – in the light of sharp fluctuations of the Russian currency, which was demonstrated by jumps of exchange rates this winter and spring.
Analysts of Gaidar Institute note that in such conditions all benefits will be received by foreign competitors of the Russian exporters of energy carriers, whose contracts will be still registered in dollars.
Workaround of oilmen.
Oil exporters offer another way - the transition from dollars to euro. According to the head of "Gazprom neft" Alexander Dyukov, 95 percent of contractors of his corporation are ready to replace the American currency of contracts with the European.
But A. Dyukov also doesn't hide that there are serious risks of additional losses that have not yet been calculated. But if the risks are accepted, then after the transition to euro the question of payment for Russian "black gold" in rubles can be considered.
"Gazprom neft", as A. Djukov assures, has a sufficient margin of safety: the average cost of loans in the portfolio of the corporation is now 3.5 percent, in case of deepening sanctions it can raise up to 3.8 percent, but this is not critical because all projects of the Company have an internal rate of return at the level of not less than 15 percent. Rating losses also don't frighten the head of corporation because, according to his words, ratings and financial performance of the company are so high that "there is a level the Company can fall to without serious consequences".
Political ears.
None of experts doubt that the desire of the Russian exporters of power raw materials is caused by policy, though the Kremlin denies it: the Russian President's Press Secretary Dmitry Peskov claims that the Government didn't give a command to state corporations to work this question, these are market requirements.
However comments of heads of the largest Russian companies indicate the opposite.
Too often they think about the dominant role of the U.S. dollar in the global economy. And if refusal of Russian suppliers from dollar could lead to reduction of the impact of the U.S. currency in the world and make use of euro, yuan, Swiss franc more widely, the option with transition to euro, pursuing the same goal, also scored a wedge in the difficult relations of America with the Old World.
How did "the gas war" reflect on the oil and gas futures?
On the background of occurred events between the leading states, and in particular "gas war", the futures of Natural Gas April 2014 (NGJ14) rose by 0.182 points (+4.13%), and it is trading at the level of 4.584 points.
In addition, oil futures Crude Oil WTI May 2014 (CLK14) dropped 0.42 points (-0.42%), and is trading near the mark of 100.72 points, as explained to analysts of the section "forex news, currency and exchange," the magazine for traders and investors "Market Leader" in the press service of the brokerage company Nord FX.
